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Between iFixit's teardown of the iPhone 4 and iSuppli 's subsequent analysis of the components, we're finally gaining some fairly telling insight as to how much it costs to physically...
06-28-2010, 12:31 PM #1
iSuppli: iPhone 4 Pretty Inexpensive to Produce
Between iFixit's teardown of the iPhone 4 and iSuppli's subsequent analysis of the components, we're finally gaining some fairly telling insight as to how much it costs to physically produce a fourth generation iPhone. As you might expect, it isn't overtly expensive to manufacture Apple's updated smartphone.
As it turns out, the iPhone 4 costs approximately $200 to manufacture - $187.51 to be as close to "exact" as possible, according to iSuppli. Kevin Keller, who helped orchestrate the iSuppli analysis, tells Businessweek that "over the years, the iPhone has generally tended to hover in the $170-to -$180 cost range because Apple seems to be trying to hit some kind of budget." So, given Apple's penchant for buying in bulk - and not your Costco or Sam's Club definition of buying in bulk - Cupertino has managed to procure millions of little parts in a relatively "inexpensive bundle."
Keeping iPhone-part prices low helps Apple wring higher profit from its bestselling product, which made up 40 percent of revenue last quarter.
Apple is currently peddling the 16-gigabyte iPhone 4 for $199, with the 32-gigabyte model going for $299 (with 2 year contract required). As Paul reported this morning on MMi, Apple says 1.7 Million iPhone 4s sold during launch weekend.
Image via iFixit
Last edited by Michael Essany; 06-28-2010 at 12:50 PM.
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06-28-2010, 12:39 PM #2
So, essentially, they are selling the 16 gig model at nearly cost (when subsidized by ATT) and the 32 gig for $100 more than cost. That is certainly not unreasonable at all by any standards. Usually, anything sold retail is double the cost of wholesale.
06-28-2010, 12:43 PM #3
That's only with AT&T though. The cost of unlocked version here in Canada is expected to be around $649 for 16gig and $749 for 32.
06-28-2010, 12:47 PM #4
"Apple is currently peddling the 16-gigabyte iPhone 4 for $199, with the 32-gigabyte model going for $299."
That quote is wrong. Apple is selling them for more than 199 and 299. AT&T are the one's selling them for $199 and $299 WITH contract. Might want to update that.
06-28-2010, 12:48 PM #5
06-28-2010, 12:53 PM #6
06-28-2010, 12:53 PM #7that the $187.51 cost of production estimate does not take into account some of the latent but still costly elements of iPhone production - like labor, advertising, shipping, etc. Not surprisingly, Apple isn't formally commenting on the findings and estimates presented by iSuppli.
06-28-2010, 12:54 PM #8
seems about right. ATT is eating the cost though, not Apple...although I am sure ATT is not buying those phones at full retail either.. but you can be sure that it's not the 199/299 price points they offer with contract.Really?
06-28-2010, 12:56 PM #9
Apple is probably making an average profit of about $400 per iPhone. (i.e. $600 selling price; $200 production cost). About $680,000,000 over this past weekend. Oh boy
06-28-2010, 12:59 PM #10
06-28-2010, 01:02 PM #11
Yup... AT&T gives a $400 subsidy so the $600 16 GB iPhone costs $187 to manufacture. Decent margin
06-28-2010, 01:09 PM #12
Everyone is forgetting to factor in more than just production cost. After production there's still, like the post mentions, advertising costs, packaging costs, labor costs, shipping costs and a slew of other things that will be paid per phone so Apple's/AT&T's profit per phone is much less than $400
06-28-2010, 01:17 PM #13
I would be interested to find out if At&T actually does "pay" Apple $400/phone. Since we all paid taxes on $599/$699. if not, taxes are being collected unlawfully.
06-28-2010, 01:26 PM #14
Last edited by unison999; 06-28-2010 at 01:32 PM. Reason: Automerged Doublepost
06-28-2010, 01:28 PM #15
06-28-2010, 01:29 PM #16
So that comes down to about a 38.5% price increase. Hmm. Pretty decent I'd say.
06-28-2010, 01:37 PM #17
Some of you may want to educate yourselves (ever hear of Google) before accusing - California reportedly requires sales tax on the unsubsidized phone price regardless of purchaser out of pocket at time of sale.
06-28-2010, 01:40 PM #18
$200 cost of the phone, end user would end up paying $599 for this phone when 2 year contract is up. Which goes to Apple (AT&T make money on the phone service), and Apple will also take in percentage of the monthly service of phone and the data plan. That is quite a big chunk of change.
06-28-2010, 01:44 PM #19
06-28-2010, 01:50 PM #20
Kind of a huge difference in prices. I think the actual device should be around 250 bucks at most.